House Oversight Panel Approves Cuts to Federal Retirement System, Sparking Controversy

By Jim Saksa
Posted April 30, 2025 at 5:47 PM

In a contentious meeting, the House Oversight and Government Reform Committee voted narrowly to advance a proposed budget reconciliation package that includes significant cuts to benefits for federal employees. The vote, which concluded after a six-hour markup, saw Republicans triumph with a 22-21 tally, despite dissent from GOP Representative Michael R. Turner of Ohio, who joined all Democrats in opposition.

Proposed Changes and Financial Impact

At the heart of the proposal is a plan aimed at reducing national deficits by more than $50 billion over the next decade, primarily by modifying components of the Federal Employees Retirement System (FERS). The most contentious measure would require long-serving federal workers to increase their contributions to FERS from their current lower rates to 4.4 percent of their salaries, a move projected to generate approximately $30.7 billion in revenue.

Further changes propose switching the calculation of pension benefits for retiring federal employees from the average of their three highest-earning years to their five highest-earning years, which could decrease payouts by around $4.75 billion over ten years. Additionally, the plan suggests eliminating annuity payments that federal retirees can receive prior to reaching the age of 62, potentially saving $10.1 billion.

Turner expressed strong concern regarding these proposals, asserting that modifying employee benefits mid-employment contradicts core Republican and American values. “Employee benefits are not a gift. They are earned,” he stated.

Union Reactions and Workforce Concerns

The proposed changes elicited immediate condemnation from employee unions, which accused the committee of undermining an already beleaguered federal workforce. Daniel Horowitz, representing the American Federation of Government Employees, warned that the proposals could make the government a less attractive employer. “I don’t know how we will get young people to ever work for us again after this,” he lamented.

Critics argue that the increased contributions would significantly reduce take-home pay for federal employees. For instance, workers at the lower end of the federal pay scale, earning just under $28,000 annually, could face a loss of approximately $1,000. In contrast, higher-ranking officials with salaries around $162,000 might see their take-home pay decrease by about $5,800. John Hatton, a representative for the National Active and Retired Federal Employees Association, expressed skepticism about the anticipated savings, questioning whether agencies would genuinely reduce spending or merely use the increased contributions as a fiscal band-aid.

Public Safety Concerns and Staffing Issues

Concerns were also raised by the U.S. Capitol Police Labor Committee, which indicated that such cuts could exacerbate current staffing shortages within the force. Union Chairman Gus Papathanasiou cautioned that impending resignations and retirements due to the proposed financial strain could compromise the safety of Capitol security.

Republican Justifications and Democratic Opposition

Republicans defended the proposed reforms as vital for addressing the nation’s fiscal challenges. Oversight Chairman James R. Comer of Kentucky argued that the reconciliation process offers a unique opportunity to condense government spending and enhance the efficiency of the federal bureaucracy.

Conversely, Democrats, led by Representative Stephen F. Lynch of Massachusetts, claimed that the overarching reconciliation package prioritizes affluent Americans at the expense of federal employees. Lynch criticized the Republican approach, emphasizing that the prospective tax cuts for the wealthy would surpass any spending reductions stemming from the proposals.

Moving Forward

In addition to the contentious FERS changes, the legislation includes a provision mandating new federal employees to raise their contributions to FERS by an additional 5 percent, contingent upon waiving civil service protections in favor of at-will employment—something critics deemed counterproductive to government operations.

The markup also proposed a $350 fee for filing with the Merit Systems Protection Board, which could create financial barriers for employees seeking justice, particularly for low-income or recently separated individuals.

While one provision directing the Office of Personnel Management to audit the Federal Employees Health Benefits program for ineligible dependents generated less criticism and could yield $1.5 billion in savings, the overall reception of the reconciliation package remains highly negative among federal employees and unions.

As the proposals advance to the House floor and subsequently to the Senate, unions plan to intensify their lobbying efforts against the cuts. “No tears will be shed here if the entire bill unravels,” Horowitz concluded, reflecting the intense resistance faced by the reconciliation package.

The House Oversight panel’s endorsement of cuts to the federal retirement system illustrates a significant legislative push driven by fiscal conservatism, raising critical questions about the future of federal employee benefits and public sector employment in the United States.

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